Shares of One 97 Communications Ltd, the parent company of Paytm, continued to extend its gains as the new-age internet player surged another 7 per cent on Friday to cross Rs 800 mark for the first time after December first week. The stock took about 11 months to cross Rs 800.
Shares of One97 Communications (Paytm) soared 6.52 per cent to Rs 847.70 during the trading session on Friday with its total market capitalization nearing Rs 54,000 crore. The stock had settled at Rs 795.80 in the previous trading session on Thursday.
Paytm shares have rallied nearly 175 per cent from its 52-week low at Rs 310 hit on May 9 this year. However, the stock is merely 8.5 per cent away from its 52-week high at Rs 926.70 hit on November 23, 2023. Shares of Paytm have rallied nearly 67 per cent in the last three months, while the stock is up nearly 25 per cent post its quarterly earning in late October 2024.
Paytm Q2 results
Paytm's parent One 97 Communications reported a profit of Rs 930 crore in the second quarter ended September 2024 from Rs 290 crore loss a year back, on the back of gains made from sale of its entertainment ticketing business to Zomato. Net of the expectational gains from the sale of ticketing business, Paytm would have reported a net loss of Rs 495 crore.
Paytm's revenue from operations increased 10.5 per cent to Rs 1,659 crore on a sequential basis but was down 34 per cent YoY. As part of its strategy to recover, Paytm had announced to sell its event-ticketing business in August to food delivery firm Zomato to focus on its payments and financial services business.
Brokerage views
Paytm delivered robust operational metrics in Q2FY25, which provided a sustainable outlook for the business. Cross-selling financial services opportunities in the merchant business would provide long-term support. New partnership in the payment business, prudent marketing spending plan, and focusing on reactivating customer base aiding topline, said Geojit Financial.
"Margins are expected to improve with a further reduction in employee costs and continued automation. Hence, we upgrade our rating to 'accumulate' based on a 6 times FY26E P/S ratio, with a revised target price of Rs 854," Geojit added.
Paytm reported revenue growth of 10.5 per cent QoQ with MTU decline of 9 per cent, but ARPU growth of 21.4 per cent QoQ. Payment Services and Financial Services grew 7 per cent and 34 per cent QoQ respectively. Adjusted Ebitda loss reduced to Rs 185 crore, led by revenue uptick and strong cost management, covering up even for upfront charge, said Dolat Capital.
"Q2 witnessed a sharp recovery in performance and now with NPCI approving new UPI client onboarding under TPAP license should pave path for MTU revival. We have kept our growth/OPM estimates largely unchanged adjusted for divestment of entertainment biz," it added, maintaining ‘buy’ rating with a target price of Rs 960 on the stock.